Three telltale signs of true pension reform

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In November, San Franciscans will have a choice between two competing ballot initiatives designed to address The City’s escalating pension crisis. The stakes are huge as The City stands on the edge of a fiscal meltdown due to exploding pension obligations of almost-unfathomable size.

The first option, the San Francisco Pension Reform Act, is a citizen-led initiative that saves The City and its taxpayers $1.25 billion over the next 10 years.

The second option, the City Hall plan, saves San Francisco $750 million over the same period of time. That’s a half-billion-dollar shortfall. This option, submitted by Mayor Ed Lee, will be reviewed by the Board of Supervisors in the coming weeks.

As it stands, the plan fails The City. It’s the equivalent of promising that you will save a drowning swimmer, but then throwing a lifeline you know will only go halfway. That’s why it is important for the public to pay attention when the City Hall plan goes before the board, where it will be debated and, we hope, vastly improved.

While San Franciscans follow the hearings, we should demand supervisors act in the entire city’s best interests, not just those of a single group. If the board is truly committed to The City’s best interests, look for three telltale signs in the upcoming hearings.

First, will the board increase the annual cost savings? Pension costs are projected to rise by hundreds of millions of dollars in the next few years. We can pay for that in one of two ways: out of taxpayer dollars or through severe cuts to public services, such as education. As it stands, the amount of money saved by City Hall’s option is woefully inadequate. If officials are serious about reform, look for the annual savings figure to rise to a minimum of $100 million a year, up from as little as about half that right now.

Second, will the board reject the practice of “pension spiking”? Pensions are “spiked” when a city employee’s pay is artificially increased at the end of their career, which in turn sets their pension for life. If the board is serious about preventing “spiking,” it will want to calculate pensions based on employees’ final five years of service instead of three. According to the civil grand jury, spiking has cost The City more than $120 million.

Third, will the Board of Supervisors make the plan fair? The City Hall plan requires increased contributions from public employees based on their pay in $50,000 increments. A worker making $50,000 is treated the same as one making double that. By contrast, the Reform Act uses increments of just $10,000. City Hall’s plan also does not require sufficient contributions from public safety workers, who receive more-generous pensions that require contributions from regular workers to subsidize them.

Pension reform is arguably the most crucial issue facing the future of our city. We need bold solutions to this big problem. If the board addresses these three points in the weeks ahead, San Francisco will have the reform it deserves — fiscally responsible, sustainable and fair.

It does not matter who receives credit for pension reform, only that we effectively tackle the crisis instead of kicking the can down the road. Let’s do this right and do it once. The most important question is which plan saves The City and its taxpayers more money so we can avoid tax increases or service cuts.

So today, look for these three telltale signs of real reform. If the board is serious, supervisors will meet these minimums. I will be watching, and I hope you will too.